Government’s strategy for Broad-based Black Economic Empowerment

The Transfomation Imperative Initiatives since 1994 OVERVIEW The Transfomation Imperative Initiatives since 1994 Broad-based black economic empowerment strategy Policy instruments ‘balanced scorecard’ Financing BEE

THE TRANSFORMATION IMPERATIVE Legacy of systematic dispossession and disempowerment during colonialism and apartheid Transformation has political, social and economic dimensions A more equitable economy will support the drive for accelerated growth

INITIATIVES SINCE 1994 Dismantling machinery of apartheid Constitution enshrines basic human rights of all South Africans Constitution recognises the need for redress Legislative measures: Restitution of Land Rights Preferential Procurement National Empowerment Fund Employment Equity Act Competition Act

INITIATIVES SINCE 1994 Various policies and programmes Integrated Human Resource Development Strategy Urban Renewal Rural Development Tourism Transformation Strategic plan for agriculture Small enterprise development

INDUSTRY SPECIFIC INDICATORS & TARGETS KEY PRINCIPLES A clear definition of Black Economic Empowerment BEE is an inclusive process BEE is part of our growth strategy Economic growth, development and BEE are complementary

Broad –based Black Economic Empowerment A process that directly contributes to the economic transformation of South Africa and brings about significant increases in the numbers of black people who manage, own and control the country’s economy, as well as significant decreases in income inequalities Includes: HRD - preferential procurement Employment equity - enterprise development Investment, ownership and control of enterprises and economic assets

Advisory council on BEE Preferential procurement POLICY INSTRUMENTS Enabling legislation Advisory council on BEE Preferential procurement Restructuring of state-owned enterprises

POLICY INSTRUMENTS (cont.) Licensing and related regulatory instruments: Fishing Mining Gambling Liquor Sector Charters and Enterprise Partnerships: Only for designated sectors Encourage voluntary compliance

A “BALANCED SCORECARD” Direct empowerment: Equity ownership Management Human resource development Employment Equity Preferential procurement Enterprise development

FINANCING BEE Need to maintain macroeconomic stability Need to address market failures R10bn over 5 years Industrial development corporation National empowerment fund Targeting incentives and other support-measures for enterprises

INSTRUMENTS (cont.) Black Economic Empowerment Advisory Council To provide considered advice to the government To promote institutional and societal consensus on the implementation of BEE. To assist in monitoring and evaluation

INSTRUMENTS (cont) Utilising regulatory instruments To set out consistent empowerment measurement indicators and definitions and provide guidance to stakeholders; To allow for the issuing of codes of practice through an enabling act to promote certainty in the application of BEE

IMPLICATION FOR THE SECTOR The industry should therefore give consideration to the following: The design of comprehensive BEE programmes for the sector Programmes should address the following: the core BEE indicators as outlined; outcomes targets/percentages; appropriate financing instruments to promote affordable and sustainable ownership;

IMPLICATIONS FOR THE SECTOR appropriate financing instruments to promote affordable and sustainable ownership; a reporting, monitoring and evaluation system; independent auditing by accredited BEE rating agencies or approved industry associations.

IMPLICATIONS FOR THE SECTOR (cont) Recruit black people into executive decisions making positions in the company; Develop a comprehensive procurement and enterprise development strategy ; Sell equity to a black firm; Choice of partner and funding arrangements are critical; New shareholders must exercise a level of influence over direction of the business interests in SA; demonstrate a commitment to add value to the investment;

CONCLUSION To ensure that the benefits of empowerment are shared across society and impact as widely as possible, the Strategy aims to mobilize all South Africans to support BEE as an integral component of economic stability and of efforts to increase South Africa and the regions productive capacity. Partnership initiatives are thus critical. The inclusion of black people in meaningful and sustainable economic activities underpins economic stability and prosperity and promotes human dignity. The reality therefore is that the government has to act to advance Black Economic Empowerment if we are to attain the equitable, non-racial and non-discriminatory society that is embodied in the Constitution.